Corporation Tax Act 2010 section 579

Effects of cessation: corporation tax

Section 579 sets out the corporation tax consequences when a group or company ceases to be a UK REIT, or when a company leaves a group UK REIT, including the deemed disposal and reacquisition of property rental business assets at market value.

• When a company exits the UK REIT regime, its property rental business is treated as ceasing immediately before the exit, and assets involved in that business are deemed sold and reacquired at market value.
• The deemed sale and reacquisition creates a tax point at market value, potentially triggering capital gains or losses on the property rental business assets held at the date of cessation.
• The accounting period for the company's residual (non-property rental) business ends on cessation and a new accounting period begins, while assets already excluded from the REIT's financial statements under section 533(3) are ignored for the deemed disposal rules.
• These cessation consequences do not apply where a company simply moves from one group UK REIT to another, or where a company UK REIT joins a group UK REIT, and the rules are also subject to the special demerger provisions in section 559.